Gazprom Raises $700 Million in Eurobonds Against Backdrop of EU and US Sanctions
Gazprom has successfully raised $700 million via the placement of one-year Eurobonds at a yield of 4.45%, as much as 3% higher than normal. This represents the first public offering on a foreign market by a major Russian state-owned enterprise (RSOE) since the second wave of EU sanctions. Not surprisingly, interest rates for even top-tier Russian borrowers have increased considerably since the imposition of Western sanctions.
JP Morgan Chase is reportedly the lead arranger and underwriter with Gaz Capital, a subsidiary of Gazprom, acting as issuer. Other organizers included Credit Agricole, Gazprombank, and Metropol. Such bonds provide discretionary cash for Gazprom that can be used as the Kremlin sees fit. This development could establish a precedent permitting prominent RSOEs to return to the foreign securities markets, despite the unresolved Ukraine crisis (e.g. on the same day as the Eurobond announcement, Russia has reportedly moved 32 tanks, sixteen howitzer cannons and 30 trucks of troops into the Luhansk region of the country).